[cglong]

While I do agree the iPhone was the major cause, I think this was an intentional move by Apple. During the early years, iTunes let you make your own ringtones for free using songs in your library. GEICO even had a novelty ringtone online you could download to your iPhone for free. Eventually, Apple started selling premade ringtones (for the same price as the full song!), after which the built-in iTunes functionality was removed.

[sorrythanks]

You can still make a ringtone for free by renaming an m4a to .m4r and then dragging it to your phone.

You can also make ringtones right on the phone using Garageband.